A fighter plane has been shot down and plunged into Benghazi after a night of large explosions and shelling in and around the Libyan rebel stronghold. Fighting has continued despite the regime declaring a ceasefire under threat of UN-backed air strikes.

TV footage and photographs showed the fighter passing over, then bursting into flames and coming down with the pilot apparently ejecting. Reporters in the area confirmed the crash.

There are accounts of troops entering Benghazi and the rebels putting up barricades. But the Libyan government said none of its forces were involved. "There are no attacks whatesover on Benghazi. As we said, we are observing the ceasefire and we want international observers to come," Mussa Ibrahim, a spokesman, told Reuters.

"There are rebels attacking villages and towns trying to instigate outside military interverntion."

Muammar Gaddafi has been handed a "non-negotiable ultimatum" by Barack Obama to accept an immediate ceasefire, pull back from Libyan rebel strongholds and permit humanitarian assistance – or face the full onslaught of UN-endorsed air strikes.

In an attempt to reassure Middle East opinion and his own domestic audience, Obama said the US would help to co-ordinate a no-fly-zone but not lead an operation that will include French, British and Arab jets. The US president issued his warning after Gaddafi's foreign minister, Moussa Koussa, claimed he would accept a ceasefire in the wake of the UN security council resolution passed late on Thursday night authorising "all necessary measures short of an occupation force" to protect civilians.

In a stark message, Obama said: "Muammar Gaddafi has a choice. The resolution that was passed lays out very clear conditions that must be met. The United States, the United Kingdom, France and Arab states agree that a ceasefire must be implemented immediately."

He said this meant:

• All attacks against civilians must stop.

• Gaddafi must stop his troops from advancing on the rebel stronghold of Benghazi, and pull them back from Ajdabiya, Misrata and Zawiya.

• Gaddafi must establish water, electricity and gas supplies to all areas.

• Humanitarian assistance must be allowed to reach the people of Libya.

"Let me be clear: these terms are not negotiable. These terms are not subject to negotiation.

"If Gaddafi does not comply with the resolution the international community will impose consequences and the resolution will be enforced through military action."

In Britain, David Cameron warned: "We will judge him [Gaddafi] by his actions and not by his words. What is absolutely clear is the UN security council resolution said he must stop what he is doing – brutalising his people. If not, all necessary measures can follow to make him stop."

The UK and France later released a joint statement with the backing of Arab allies supporting Obama's ultimatum.

An official from the US national security council accused Gaddafi's forces of continuing to advance on Benghazi and the American ambassador to the UN told CNN that Gaddafi continued to be in violation of the UN resolution.

The next stage of the international response will be co-ordinated at an emergency conference in Paris including Cameron, Nicolas Sarkozy, Hillary Clinton and the Arab states that have formed an ad hoc coalition to reverse the Gaddafi advance. The French ambassador to the UN, Gérard Araud, said he expected military intervention within hours of the summit. Some as yet unidentified Arab states will join the air enforcement.

Libya's deputy foreign minister, Khaled Kaim, called for observers from Germany, Turkey, Malta and China to "verify" that the regime has been honouring a ceasefire – despite reports that its forces have been pounding cities. But a German foreign ministry spokeswoman rejected that, saying that only the UN should monitor the ceasefire.

Cameron said he had ordered British Tornado and Typhoon fighter jets to be deployed to bases in the region, along with air-refuelling equipment. He said: "This is not another Iraq. There will be no foreign occupation of Libya." He maintained that military action would be in the national interest.

"If Gaddafi's attacks on his own people succeed, Libya will become once again a pariah state, festering on Europe's border, a source of instability, exporting strife beyond her borders. A state from which literally hundreds of thousands of citizens could seek to escape, putting huge pressure on us in Europe. We cannot stand back and let a dictator whose people have rejected him kill his people indiscriminately. To do so would send a chilling signal to others."

Cameron said he had given his cabinet time to read legal advice from the attorney general, Dominic Grieve, setting out why a no-fly zone and other actions would be lawful. The cabinet was also addressed by the chief of the defence staff, Sir David Richards. A summary of the legal advice will be handed to MPs on Monday, when they will be asked to vote on a substantive motion to support military action.

Cameron won wide praise in the Commons, including support from the Labour leader, Ed Miliband, for his role in securing diplomatic support for a no-fly zone after it looked as if Britain and France were going to be left isolated. But the prime minister has been ambiguous about the extent to which his aim is to remove Gaddafi from power, and still faces questions on how long British pilots will have to police a no-fly zone if an impasse emerges on the ground.

He said: "It is almost impossible to envisage a future for Libya that includes him [Gaddafi]. It is not in our national interest for this man to lead a pariah state on the southern banks of Europe with all the problems that could entail."

But he also accepted that the UN resolution did not endorse regime change. "The UN resolution is not about choosing the government of Libya. That is an issue for the Libyan people."

Obama said the US would not dominate this UN-backed coalition. He said: "I also want to be clear about what we will not be doing. The United States is not going to deploy ground troops into Libya.

"We are not going to use force to go beyond a well-defined goal: specifically the protection of civilians in Libya."

The Pentagon, in a statement, said Libya has about 30 missile sites, mainly spread along the coast, and that they posed a "significant threat to US and Nato aircraft".

The French foreign minister, Alain Juppé, said everything was ready to launch military strikes, and that a ceasefire would need to cover the whole country.

The announcement of a ceasefire was dismissed by a rebel commander in the anti-Gaddafi stronghold of Benghazi, who accused the Libyan leader of bluffing. Khalifa Heftir told reporters: "Gaddafi does not speak any truth ... all the world knows that Muammar Gaddafi is a liar. He and his sons, and his family, and all those with him are liars." Reports continued of fighting in Misrata, a key port between the capital and Benghazi.

Officials in Tripoli were tight-lipped about the details of the ceasefire. The decision seemed based on hopes that it would sow division inside the UN. There was little evidence of any wish to engage in real dialogue with the Benghazi rebels.

Libyan state media all but ignored the ceasefire, continuing the stream of patriotic programmes and announcements, playing clip after clip of pro-Gaddafi demonstrators declaring support for their leader. Tripoli seemed calm but tense throughout the day, with police patrol cars visible in unusual numbers in the city centre as officers checked identity cards. Several explosions to the west added to an already jumpy mood.